Government overturns LASPO changes as Djanogly hits out at “inflated” law firm profits

By Legal Futures

18 April 2012

Djanogly: legal aid can aggravate disputes

The government as expected overturned all of the House of Lords amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill last night, with justice minister Jonathan Djanogly saying the Jackson reforms would put an end to the “racket” that has allowed “inflated profits” for law firms.

Before the debate began, the government won a vote to limit MPs’ consideration of the amendments to just five hours. Though there were isolated rebellions by coalition MPs, the votes to strike down the changes were generally passed by 40-60 votes.

The government only offered one extra concession to make it easier for the victims of domestic violence to claim legal aid, having already in effect accepted three of the Lords amendments by coming forward with its own versions of them, on the independence of the new director of legal aid casework, legal aid for welfare benefit appeals to the upper courts, and the definition of domestic violence.

Mr Djanogly began the debate by declaring that the government had already made “significant concessions”, adding: “Access to justice is of fundamental importance to our legal system and to this government, but our legal aid system is by any measure extremely expensive and sometimes prone to aggravating disputes unnecessarily by pushing them into the courtroom.”

On the bid to introduce a mandatory telephone gateway to legal aid, he said: “That is not only much more efficient, enabling calls to be properly triaged, but simpler to access and generally of higher quality.”

He added that initially the gateway will apply to debt, discrimination and special educational needs cases, but not community care. There will also be an exemption for emergency cases, those in detention and under-18s, while advisers will always have the option of referring the caller to face-to-face advice if deemed appropriate.

Justice secretary Ken Clarke urged MPs to take care “before the very powerful and quite legitimate lobbies that have descended on the House since we proposed the changes just sweep everybody into believing that ever-wider provision of legal aid is necessary”.

Refusing to give further way on legal aid for children beyond the concession on clinical negligence claims involving brain injury around birth, he said many of the remaining clinical negligence cases involving children are “relatively simple, do not involve lengthy and detailed investigations… and are suitable for funding through a conditional fee agreement (CFA) in exactly the same way as for adults”.

Mr Clarke said the amendment for legal aid to cover the costs of expert reports in all the cases that currently are funded by CFAs “would allow lawyers to apply for legal aid to cover the expert report in any case where a client, of any age, was financially eligible, and to still get their success fee in respect of their other legal costs. That would transfer all the risk in a ‘no win, no fee’ case from the solicitors and insurers to the legal aid fund and the taxpayer. That would be unfair to the taxpayer and would result in a significant expansion of the legal aid scheme”.

Turning to the Jackson reforms, Mr Djanogly said that to accept the Lords amendment introducing an exception for mesothelioma cases would “create inconsistency and damage the wider goal of our reforms – to restore sense to the costs of litigation, which have been substantially increased by the way in which ‘no win, no fee’ cases operate, largely to the detriment of defendants”.

They are not sufficiently different from other personal injury cases to justify it, he added.

Mr Djanogly insisted that while the CFA system was meant to promote access to justice, “it has frequently ended up as something of a racket allowing risk-free litigation for claimants, inflated profits for legal firms, and punitive additional costs for defendants…

“I do not believe we should accept the view that critics sometimes advance that our reforms will leave victims of this terrible disease out of pocket. It is true that under our plans individuals will pay legal costs out of their general damages. Crucially, though, damages for future care and losses are protected, and general damages are being increased by 10% to offset a success fee capped at 25%. It is, of course, entirely up to the lawyer whether any success fee is taken from a claimant’s damages at all…

“The aim of our reforms is to end the current situation whereby legal firms can get away with charging what they want because the claimants do not have a stake in keeping an eye on the bill. At a time when the cases in question are becoming easier to bring, we should not accept amendments that would reduce pressure on legal firms to cut their fees. Instead, our focus should be on cutting inflated margins, not making exemptions for one type of disease.”

Labour justice spokesman Andy Slaughter said the “obvious way to stop inflated costs” would have been to reduce lawyers’ base costs than take money from damages. “The beneficiaries of all this will be the defendants and their insurers. They will have significantly reduced liabilities if they lose. Insurance companies will also benefit, because the government are promoting a new market in legal expenses insurance – a tax on all citizens worth billions to the industry – although how they expect people to insure against industrial disease I do not know.”

The House of Commons’ votes on the amendments will now go back to the House of Lords next week, although the government is seeking to invoke ‘financial privilege’ to overrule further Lords objections.

One Response to “Government overturns LASPO changes as Djanogly hits out at “inflated” law firm profits”

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